Young couples fall into mortgage debt trap

Couples buying their homes are particularly vulnerable to racking up debts they cannot afford, new research shows.

The report into indebtedness by the Consumer Credit Counselling Service says that home buyers, particularly on lower incomes, can quickly find themselves saddled with debt of 44 times their income.

The CCCS said that many couples take out loans based on joint salaries, only to run into financial difficulties if one or both incomes is lost, which can happen for a variety of reasons, including pregnancy or unemployment.

The research, sponsored by the Halifax, comes at a time when the government's "debt task force" is trying to scrutinise the circumstances surrounding debt and looking at ways of improving the small print in loans.

Information about levels of over-indebtedness is relatively sparse and the CCCS, which offers free help to people in debt, points out that more detail should lead to better lending.

The CCCS points out, however, that social exclusion issues arise if lenders deny credit to particular set of individuals.

This latest report, "when credit turns to debt" which is published today, debunks any suggestion that the young are reckless when offered credit. Instead, it is those aged between 25 and 39 who are most likely to find themselves in financial hardship, especially single men and couples.

People living in Scotland, the north west of England, the west midlands and the south west register the highest levels of "debt stress" - a measure not just of debt levels but also of numbers of loans outstanding and debt to income ratios. Those in Northern Ireland, the south east of England and London appear less financially burdened.

The report is unable to shed light on whether an individual's financial situation is worsened by the number of lenders which have provided loans to that individual.

The research is based on more on than 10,000 people who contacted the CCCS with debt problems. Yorkshire people seem most likely to ask for help, while low income - under £500 a month - is not the driving reason behind contacting the CCCS.

According to the findings, people with incomes of more than £2,000 a month are able to cope with their debts, or, perhaps are least likely to ask for advice on handling them.